Mar 21, 2008

Market Review - Most indices fall with Sensex

Most indices fall with Sensex

With a fall of close to thousand points on Monday, the Sensex has gone right back (14,842) to where it was on August 27 last year.

During this seven-month roller-coaster ride, many indices have risen to new highs, only to fall all the way back to their earlier levels. In fact, quite a few have fallen below the levels that they were at seven months ago.

A detailed analysis by the ET Intelligence Group of different ET sectoral indices reveals a rather interesting picture. A close examination of the mid-cap and small-cap indices, these were red-hot during most part of the past year, reveals that both of them have almost lost the entire value they gained in the latter half of the past year.

The ET mid-cap and ET small-cap indices stand at 7,501 and 10,494, respectively, which is 5% lower and 4.4% higher than what they were in August 2007. It does seem that these indices have fallen twice as fast as the time it took them to reach the dizzy heights of a few months ago.

Sectoral indices have also had a torrid time. Out of the 20 ET sectoral indices we have considered, nine are still in the green compared to their values in August last year. The average return of all these sectoral indices as compared to their values in August last year is still a positive 3.69%.

Of the 11 sectoral indices that showed a decline, ET Infotech showed the steepest decline at 25.7% and Bank Index showed the least decline at 0.02%. Similarly, amongst the indices that went up, the two biggest gainers were ET Sugar and ET Shipping, which have gone up 44.2% and 32%, respectively.

Interestingly, while some indices have fallen steeply, they are still trading well above the level that they were in August. For instance, the ET Metal index, which fell by almost 7%, on Monday is trading at 29% higher from its level in August last year. With the markets showing no signs of reversing course, it is very likely that many of these indices could see still deeper cuts